2) Imagine a person who has coronavirus and is using cough syrup (x) and Tylenol (y) to treat

the symptoms as modeled by the following utility function:

U (x,y) = x^0.7 y^0.3

a. What is their Marshallian Demand function for cough syrup?

b. What is their Marshallian Demand function for Tylenol?

c. What is their Hicksian Demand function for cough syrup?

d. What is their Hicksian Demand function for Tylenol?

e. What is the direct effect between Tylenol and the price of cough syrup? What does this

mean economically?

f. What is the cross-price elasticity of demand for Tylenol? What does this mean

economically? Are Tylenol and cough syrup complements, substitutes, or unrelated?

g. What is the direct effect between cough syrup and income? What does this mean

economically?

h. What is the income elasticity of demand for cough syrup? What does this mean

economically? Is cough syrup a normal or inferior good?

i. What is the direct effect between cough syrup and its own price? What does this mean

economically?

j. What is the price elasticity of demand for cough syrup? What does this mean

economically? What category is this?

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